Egypt’s automotive market has been grappling with instability and unprecedented stagnation since March 2022, primarily due to a complex interplay of factors that have led to a sharp decline in car imports and a steep spike in prices.
The crisis can be traced back to the outbreak of the Russia-Ukraine war, which disrupted global supply chains and sent shockwaves through Egypt’s auto industry.
Supply shortages were made worse by the flotation of the Egyptian pound and the subsequent scarcity of the US dollar, which made importing even more difficult.
Speaking to Ahram Online, Khaled Saad, secretary-general of the Association of Automobile Manufacturers, said that the supply of new cars is not matching market demand.
“This is because there is a shortage of supply, which pushes prices much higher than the face value of the products,” Saad added.
He also noted that Egypt’s membership in BRICS Plus could potentially relieve the crisis by reducing dependency on the US dollar for imports.
Sales in the Egyptian automotive market dropped by 65.5 percent during the first eight months of 2023 compared to the same period the previous year, to 51,167 vehicles, down from 148,461, according to a report by the Automotive Information Council (AMIC).
Passenger car sales declined 65 percent to 38,030 during the same period, compared to about 110,212 vehicles a year before.
Meanwhile, sales of buses fell 55.7 percent to 5,043 vehicles from 11,395; truck sales fell by 70 percent, reaching 8,94 vehicles from 26,854.
“Given that automobiles are luxury goods rather than essential, the government’s efforts to boost the dollar proceeds have not yet benefited the sector,” Saad noted.
The crisis that started during the COVID-19 pandemic in 2020 and continued into 2021 was marked by a shortage of electronic chips that has persisted to the present day, said Hussein Mostafa, former executive director of the Automobile Manufacturers Association to Ahram Online.
“The frequent increases in global shipping prices resulting from the ongoing conflict between Russia and Ukraine have exacerbated the automotive sector crisis,” Mostafa noted.
The situation depleted existing stocks and decreased imports of complete automobiles, causing a sharp rise in prices and diminished consumer purchasing power.
Imports of passenger cars declined to $1.915 million in 2022 from $3.664 million a year before, according to data released by the Central Agency for Public Mobilization and Statistics (CAPMS) in March 2023.
Furthermore, “spare parts are scarce due to the shortage of foreign currency, driving prices through the roof,” Mostafa elaborated.
Mostafa said that “the end of this crisis depends on achieving economic development and growth with the aim of reducing inflation and stabilizing prices, besides the availability of foreign currency.”
Prime Minister Mostafa Madbouly announced in August that the government is in the process of providing a package of incentives to encourage the localization of the automotive industry,
This came after launching the Egyptian strategy for localizing the automotive industry in 2022 to establish the state as a main gateway for emerging vehicle markets in Africa.
Source: Ahram Online